A group of private companies known as the Digital FMI Consortium will trial cross-border payments using a sterling-backed stablecoin and provide its findings to the Bank of England.
The DFMI is the UK’s first privately-led pilot that seeks to evaluate the potential for a digital currency ecosystem in the country. The pilot will include an evaluation of a sterling-backed stablecoin as well as a retail central bank digital currency (CBDC).
According to a press release on Wednesday, the pilot, named Project New Era, is due to begin in October and will run from one to two years. The project seeks to forge a private/public collaboration that will investigate the challenges for the implementation of a regulated stablecoin together with a CBDC.
Seemingly in line with the UK’s desire to make itself a global digital asset hub, Project New Era will look to strike a balance where cryptocurrencies, specifically stablecoins, and CBDCs, can co-exist harmoniously.
To that end, the DFMI is made up of financial institutions that comprise commercial banks, payment providers, telecommunications providers, and fintechs, together with representatives from the cryptocurrency industry.
Brunello Rosa, CEO and Head of Research at Rosa & Roubini Associates, one of the companies within the consortium, summarised the current global state of affairs as regards a future payments system:
“Currently, 105 countries (representing over 95 percent of global GDP) are exploring paths towards a CBDC, while 10 countries have now fully launched a digital currency. The market continues to develop at a tremendous pace, with the British government having announced plans to make the UK a global crypto hub, the ECB declaring recently that CBDCs could be the ‘Holy Grail’ of cross-border payments, and the Fed exploring a digital dollar with increasing urgency.”
Alison Conway, Head of Strategic Development at Trust Payments gave her view of how digital assets, and particularly CBDCs could play a part in a new ecosystem:
“Commerce is constantly changing & innovating. Against this backdrop, digital currencies and CBDCs in particular offer a unique opportunity to design a playbook that drives interoperability while offering tangible benefits to both merchants and consumers. With global uncertainty and the demand for trust and transparency increasing, now is the time to build the platform and create the ecosystem that will shape the next generation of UK commerce and the broader monetary system that underpins it.”
While this new initiative does plan to make some exciting research into a new world of digital payments, it is hoped that plenty of consideration will be given to just how invasive a UK CBDC might be, given the many privacy concerns already in the public arena around such a move.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
This post was originally published here.